Shareholder Lawsuit Challenges Tilray's Voting Tactics For Authorized Share Increase

Tilray Brands Inc. TLRY faces a new shareholder lawsuit accusing the Canadian cannabis company of misleading voting practices for a second consecutive year.

The legal complaint, filed on October 31, 2024 in the Delaware Court of Chancery, alleges that Tilray misled investors regarding the voting requirements to increase its authorized shares, reported Investing.com.

Disputed Voting Standards And Shareholder Allegations

According to the lawsuit, Tilray's proxy statements for the 2023 and 2024 annual meetings inaccurately presented the voting standards needed for approval. The plaintiff argues that the company required only a majority of votes cast, rather than a majority of all outstanding shares, to pass proposals that increased the number of authorized shares. This discrepancy, the complaint claims, invalidates the approval and subsequent issuances of new common stock.

The lawsuit contends that Tilray's board of directors breached their fiduciary duties by failing to provide accurate information.

The plaintiff seeks to block the company from holding a vote on the 2024 Authorized Shares Proposal at the upcoming annual meeting scheduled for November 21, 2024. Additionally, the lawsuit demands reimbursement of legal fees and related costs for the affected shareholders.

Read Also: Tilray Joins German Cannabis Fiesta With First Locally Grown Strains

Get Benzinga’s exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you’re serious about the business, you can’t afford to miss out.

Tilray's Defense And Institutional Support

Tilray, however, firmly denies the allegations, stating that its voting practices comply with the 2023 amendments to Delaware's General Corporation Law.

The company maintains that the lower threshold for stockholder approval aligns with legal standards for corporations listed on national exchanges. Tilray's management argues that the increase in authorized shares is necessary for enhancing financial flexibility and facilitating strategic acquisitions.

Institutional Shareholder Services (ISS) has endorsed Tilray's proposal, recommending shareholders vote in favor of the increase, citing no significant concerns over past share usage.

• Read Next: Tilray Reports $200M Q1 Net Revenue, Up 13% YoY As Net Loss Improves

Cover: AI generated image